Dominated by giants like Johnson & Johnson (JNJ) and Pfizer (PFE) , the U.S. health care sector can seem like an obvious bet for pharma stocks. But several strong international health care companies remain investing opportunities as well -- especially for dividend investors.
The following three international health care stocks have high dividend yields and reasonable valuations.
Sanofi: Solid Yield
Sanofi (SNY) develops and markets a variety of therapeutic treatments and vaccines. Pharmaceuticals account for around 72% of sales; vaccines makeup about 15% of sales; and consumer health care contributes the remainder of sales. Sanofi is truly a global leader, with a third of sales coming from the U.S., a little more than a quarter coming from Western Europe, and the remainder of sales coming from emerging markets/rest of the world. Sanofi produces annual revenues of about $49 billion. Sanofi is incorporated in France. Two ADR shares equal one share of the underlying company.
The company has generated solid growth to begin the year. First-quarter, revenue grew 10.9% to $11.27 billion. Earnings-per-share per ADR of $1.19 compared to $1.02 in the prior year and was $0.09 above estimates. Pharmaceutical revenues were higher by 12.6% during the quarter. Specialty care remains especially impressive, with 18.3% revenue growth. Dupixent, which treats patients with moderate-to-severe asthma, grew 39.7% due to higher demand across approved indications. The product is now approved for use in adults in more than 60 countries and in adolescents in around 20 countries. Sanofi estimates that the product can be launched in around 50 additional countries.
Vaccine revenue improved 15.2%, mostly due to strong growth in meningitis and booster categories. Consumer Healthcare grew 11.2% as strength in allergy, cough and cold, and digestive health was only partially offset by physical and mental wellness. By region, U.S. sales grew 11.8% and Europe was up 8.4%. The rest of the world was lower by 2.1%, with China falling 14%.
Sanofi reaffirmed its outlook for 2023 as well. The company expects earnings-per-share growth in the low single-digits, with currency exchange likely to be a 5.5% to 6.5% headwind, compared to prior guidance of a drag of 3.5% to 4.5%. The stock has a 3.3% yield.
Investing Rx: GlaxoSmithKline
GlaxoSmithKline (GSK) develops, manufactures and markets health care products in the areas of pharmaceuticals, vaccines, and consumer products. GlaxoSmithKline's pharmaceutical offerings address the following disease categories: central nervous system, cardiovascular, respiratory and immune-inflation. The company generates about $36 billion in annual sales.
In the 2023 first quarter, revenue fell 29.4% to $8.7 billion while adjusted EPS of $0.92 rose 10% compared to $0.83 in the prior year. All figures are listed in U.S. dollars and at constant exchange rates. Much of the top-line decline was due to lower Covid-19 sales. Excluding this, revenue was up 10%.
Specialty medicines fell 33% for the quarter, but this was mostly due to a tough comparison due to Covid-19 related sales in the prior year. Respiratory was up 10% due to demand both in the U.S. and worldwide. Benlysta and Nucala both continue to perform well. Revenue for HIV products was up 15% due to strong patient demand. General Medicines grew 9%. Vaccines improved 15% due once again to strength in Shingrix and Meningitis sales. The company has several key competitive advantages. First, GlaxoSmithKline spends heavily on research and development; nearly 13% of sales were used for R&D purposes last year.
GlaxoSmithKline reaffirmed its prior outlook for 2023 as well, with the company expecting EPS growth of 12% to 15% for the year. Shares yield over 4%.
Research-Based: Roche
Roche Holding (RHHBY) is a research-based health care company headquartered in Switzerland. Founded in 1896, Roche has grown from producing vitamin preparations to a multinational company with around 97,000 employees. Roche's operating businesses are organized under two divisions. The Pharmaceutical division includes Genentech and Chugai. Genentech is an American biotechnology company, and Chugai is a Japanese biotechnology company. The Diagnostics division has four segments: Centralized and Point Care Solutions, Molecular Diagnostics, Tissue Diagnostics, and Diabetes Care.
The company released its first quarter 2023 sales update on April 26, showing a sales decrease of 3% at constant currency rates, mainly due to the decline in Covid-19 tests and strong foreign-exchange tailwinds against the Swiss franc. Diagnostics-based business increased by 4. Despite solid sales from Immunodiagnostic products, which were up 9%, and diagnostics solutions for detecting and monitoring cervical cancer, which were up 22%, Covid-19 tests decreased by 30% and 39% in Europe, the Middle East and Africa and North America, respectively. Pharmaceutical sales increased by 9%, driven by the strong demand for newer medicines. The eye medicine Vabysmo became the division's biggest growth drive despite only launching in early 2022.
Over the last five years, Roche's earnings have grown at a compound annual growth rate of 13.0%. Health care remains a competitive sector, but the main advantage for Roche is its R&D department. The company initiated four new phase 3 trials last quarter, had two approvals, and has around 30 phase 3 trials planned for 2023. The company has also been researching novel techniques to cure diseases such as Alzheimer's using quantum computing.
Roche has increased its dividend for over 30 years in its home currency. Shares currently yield 3.2%.
